Why NewLink Genetics Corp. Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of NewLink Genetics (NASDAQ: NLNK  ) , a clinical-stage biopharmaceutical company developing immunotherapeutic options to treat cancer, fell as much as 15% after providing an update on its IMPRESS phase 3 pancreatic cancer trial involving algenpantucel-L.

So what: According to NewLink Genetics' press release, the independent data safety monitoring committee recommended that its IMPRESS study continue without modification after completing its first or two planned interim data analysis. This first analysis was planned once there were 222 patient events, followed by a second analysis at 333 patient events, and perhaps a final analysis at 444 patient events. In the words of Chairman and CEO Dr. Charles Link, "As we have previously emphasized, continuation of this study was an anticipated outcome considering the high statistical threshold assigned to this first interim analysis under the special protocol assessment."

Now what: While there's nothing inherently bad in today's IMPRESS trial update, there's also no upside catalyst that some investors had clearly been looking for. Given the promise surrounding NewLink's HyperAcute immunotherapy platform -- which works by encouraging modified cancer cell lines to express alpha-gal, a carbohyrdrate that we have a natural immunity to and that could attract an immune response -- there had been hope that the DSMC would stop the trial early due to a very high bar of statistical efficacy. Since that failed to happen, some of those same shareholders are now clearly wondering how much of a benefit algenpantucel-L may pack. Based on the data I've seen from its phase 2 studies, I'm still very intrigued by its potential. There hasn't been a revolutionary new approach to pancreatic cancer treatment in quite some time, and NewLink's experimental therapy could be that answer. I would certainly encourage you to add NewLink Genetics to your watchlist.

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  • Report this Comment On March 07, 2014, at 6:28 PM, icarusa wrote:

    After searching for an explanation for the severity of today's drop, I think that the most likely culprit of this knee jerk reaction is Adam Feuerstein who posted an article about NLNK on The Street. Unfortunately, his commentaries have a history of wielding market moving power. It would seem that his article of 26 Feb wasn't enough, and even with the 3 March valuation downgrade by Baird, Feuerstien went on the prowl again. His 7 March article is algo keyword threateningly entitled:" Risk of Pivotal Study Failure Rises for NewLink and Northwest Bio". He references the phase III study of its HyperAcute Pancreas (HAP) vaccine interim analyses, the announced results of which by the DSMC will allow for continuation of the study. He "offers" a very convoluted mathematical extrapolation of what the results may imply relative to survival benefit as justification for his negative outlook. Even though I can usually understand mathematical/statistical analysis, I cannot follow Feuerestein's "argument". Oddly, with his statement of the assumption that pancreatic cancer patients enrolled into the control arm of the study would have a median overall survival of 17 months, he then ups the ante, using an estimated 20 month survivial of the control arm with assorted calculations based on that and the blended median overall survivial, which I do not follow. Moreover, with the "HAP needed to demonstrate a 40-45% improvement in median overall survival compared to placebo", based on the initial presumptive 17 months, I calculate the necessary improvement range survival to be 24 to 25 months, whereas Feuerstein calculates a high bar study termination result needing an "HAP median overall survival of 34 months". That is TWICE the 17 month overall control arm survival, i.e. 100% not 45%). With the 222 death threshold for the current interim analysis, that represents 30.7% of the 722 patients, the median overall survival rate of all in the 25-27 month range. There are still 69.3% of the patients surviving, and we do not know the relative percent of control arm in either group. Even though the study didn't (yet) qualify for favorable early termination, the statistics I see don't look so bad. Finally, consider the lack of editing in this statement: "The pancreatic cancer patients in the study are living longer than the company expected, which bodes poorly for the ultimate outcome".

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